ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Chelsea put $7500 into an account paying 5% compounded continuously. She now has $10, 643.01. How long has the money been in the account?
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7 years
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6 years
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5 years
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4 years
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Explanation:
Detailed explanation-1: -According to the Rule of 72, it would take about 14.4 years to double your money at 5% per year.
Detailed explanation-2: -If an amount is invested at 7% compounded continuously, how long will it take to double? We don’t know the initial value of the principal but we do know that the accumulated value is double (twice) the principal. It takes 9.9 years for money to double if invested at 7% continuous interest.
Detailed explanation-3: -Using the rule of 72, you would estimate that an investment with a 5% compound interest rate would double in 14 years (72/5).
Detailed explanation-4: -Answer and Explanation: Hence, the number year required to triple the principal approximately are 17 years.
There is 1 question to complete.